To meet the growing demand for the energy, state-owned Petrobangla and US-based Excelerate Energy signed an agreement on February 2017 to set up Bangladesh’s first terminal to handle imported liquefied natural gas.
Petrobangla on January 25 inked a term-sheet for the terminal use agreement with Excelerate to build the LNG import terminal after several rounds of negotiations and revising initial fiscal and technical terms.
The contracts have been signed between Petrobangla and Excelerate Energy regarding the implementation and the use of the LNG terminal.
The terminal known as a floating storage and re-gasification unit will be set up on the island of Moheshkhali in the Bay of Bengal.
The unit will provide natural gas to Chittagong which has been facing an acute gas crisis for a long time.
A 90km pipeline of 30-inch diametre will carry the gas from the floating terminal to Anowara to feed the national grid.
The new terminal will enable Petrobangla to procure LNG from international gas markets which will further complement and enhance Bangladesh’s ability to reliably use the country’s domestic natural gas reserves.
Petrobangla will have to spend $1.6 billion a year to increase the supply of natural gas by 500 million cubic feet per day.
IFC, a member of World Bank has provided and arranged the required financing for the terminal.
In 2010, the government took the step to import LNG in the wake of declining reserves of natural gas which has worsened the gas crisis. The government plans to set three more LNG terminals.
Bangladesh is now reeling from an acute natural gas crisis with the daily average output of around 2,700 mmcfd against the demand for over 3,200 mmcfd.
Excelerate Energy, the pioneer and market leader in innovative floating LNG solutions, would develop the terminal in 23 months and it will operate the terminal for 15 years, after which the company will transfer ownership to Petrobangla.
The terminal is expected to be in operation in 2018.
Excelerate Energy will realise $159,000 per day as rent of the floating terminal and $45,000 per day as an operational charge. As a result, the price of each thousand cubic feet of natural gas from imported LNG would be at least $3.2.
The overall cost for handling and re-gasification of the imported LNG would be $0.59 for each thousand cubic feet of gas.
Of the total cost, Excelerate Energy will realise $0.49 and other service charges including, tugboat charge, fuel costs and port fees would cost another $0.10.